‘All Up’ Settlement Offer for ‘All Claims in the Proceeding’? – Think Again

The high-profile case recently decided by the Queensland Court of Appeal (‘Court’) involved a substantial construction dispute between Civil Mining & Construction (‘CMC’) (the contractor) and Wiggins Island Coal Export Terminal (‘WICET’) (the principal).  While CMC succeeded on their claim against WICET at trial, WICET also succeeded on their counterclaim against CMC.  The key issue arose from the fact that WICET made an “all-up” offer, expressed to be under Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (‘UCPR’), to settle “all claims in the proceeding”.  The offer was also accompanied by a covering letter which bore the heading “without prejudice except as to costs”.

However, as the offer did not distinguish between the claim and counterclaim, the trial judge had to establish whether the “all-up” offer for “all claims in the proceeding” was effective under the UCPR, and whether the offer was a valid offer under the principles of Calderbank v Calderbank [1975] 3 All ER 333 (‘Caldebank’).

The key issue at trial

The issue at trial concerned rules 360 and 361 of the UCPR particularly as to whether the “all-up” offer was less or more favourable than the order obtained by CMC.  Because both parties’ offers only stipulated a single amount payable to CMC “for all claims in the proceeding”, it could not be discerned from the terms of each offer, the amounts referable to the claim and counterclaim respectively.  Ultimately, the trial judge established that neither party triggered rules 360 or 361, because neither offer demonstrated that they were less favourable (rule 360) or more favourable (rule 361) than the order obtained by CMC.  Consequently, the trial judge ordered that:

1. WICET to pay CMC’s costs of the claim; and
2. CMC to pay the WICET’s costs of the counterclaim.

Wiggins Islands’ failure to make Calderbank offer

The trial judge also found that WICET’s offer was not an offer pursuant to the principles of Calderbank, because there was nothing in the offer or in the covering letter to indicate to CMC that WICET was making an offer pursuant to the principles of Calderbank.

While the covering letter contained the words “without prejudice except as to costs”, the offer from WICET was expressly stated to have been made under Part 5 of the UCPR and there was nothing else to indicate that the offer was intended to have effect other than as an offer under Part 5.

Wiggins Island on appeal

WICET appealed on the basis that they had both made an effective offer under rules 360 and 361, and in the alternative, that their offer should be treated as a Calderbank Offer as the formal offer had been accompanied by a covering letter which bore the heading “without prejudice except as to costs”.  The Court however established that the trial judge made no error in not taking the offer into account and no error in the exercise of his discretion.

The Court confirmed that a Calderbank offer could only come into effect if WICET had expressly shown CMC of their intention that non-acceptance of the offer would be relied on as a basis “for seeking a special costs order”.  The Court found that “the words “without prejudice except as to costs” (or similar formulations using different prepositions) is not sufficient to indicate that an offer is to be relied upon as a Calderbank offer.  The Court established that WICET’s offer was only made pursuant to Part 5, with no suggestion that it was made pursuant to anything else.

Key takeaways from the decision & the case

• offers to settle must expressly stipulate the amount payable for all claims and counterclaims and not be an “all-up sum” for “all claims in the proceeding”;
• offers to settle must not simply state “without prejudice except as to costs” (or similar formulations using different prepositions) that may be referred to as a Calderbank offer;
• offers to settle must expressly stipulate that the offer (or in the alternative) is made pursuant to the principles of Calderbank; and
• when drafting formal offers to settle, it is important to ensure that you double check the offer to ensure everything necessary has been included.

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